Working Behind the Scenes

With hurricane Sandy devastating the Northeastern U.S., Tom Larsen, senior vice president of EQECAT, a catastrophe risk modeling firm used by insurance companies and others forecast economic losses from Hurricane Sandy at $10-20 billion, and insured damage at somewhere from $5 to $10 billion (not including what would be covered by federal flood insurance.)

John Carney of talks about some unsung heroes that you might not have considered – the Federal Reserve:

The offices of the Federal Reserve banks of New York and Philadelphia are nearly empty. But the staffs of the banks, as well as the Board of the Federal Reserve in New York, are working from home to keep the U.S. financial system flowing smoothly.

In addition to creating liquidity in the economy as a stop gap against unemployment while Congress squabbles instead of hammering out a fiscal compromise, the Fed does a lot of other things to help keep the economy on track.

In a storm, people tend to withdrew more cash than usual in a storm for fear that power outages may restrict access to ATMs, bank tellers and credit card purchases. In preparation for a storm, the Fed moves in to help banks anticipate and meet an unusual demand for cash by:

  • Extending their hours to allow commercial banks more time to pick up cash.
  • Allowing banks to withdraw cash from other parts of the Fed if the branch they use is inaccessible. (a Northern New Jersey bank that would normally be served by the FRBNY can withdraw cash from the Philadelphia or Boston Fed if needed.)

I know it isn’t very exciting, but it’s nice to know that they’re doing their part.


Steve Olenski, senior content strategist at Responsys, a leading global provider of on-demand email and cross-channel marketing solutions, in his article in Forbes, asks What Makes a TV Commercial Memorable and Effective?

A few years Steve queried a number of people about these two questions:
  • “What makes a TV commercial memorable?”
  • “Is it the product/brand you remember or just the commercial itself?”

Here are some of his findings about what makes a commercial memorable:

  • Humor (the most common answer.)
  • Tagline and jingle.
  • Iconic-type character, making the ad stand out from the pack.

The Element of Disruption

What stands out to me in the responses Steve has provided are that so many of them point to the element of disruption, which makes sense in view of findings in behavioral economics that show that it takes a great deal to overcome behavioral biases and catch a person’s attention:

Generally for me, a TV spot has to score high in 2 areas to be memorable: sheer entertainment value and disruption/thought-provoking ability. That second category covers those few ingenious spots every year that go completely against the settled order of things to really achieve something different. As for whether I remember the product or just the commercial itself, that varies…Those of us in the biz latch on to the sponsor probably five times more often than the average viewing Joe or Jane — so if we’re inconsistent in our recall, imagine how they do on that score.”

Disrupting Behavioral Biases

Research in behavioral economics points to behavioral biases that often stand in the way of allowing a person to give due consideration to a product offered as an alternative to the type of product they have grown accustomed to.  For instance, status quo bias – which is the tendency to inertia, or not to change – becomes especially strong when choices are complex, as with financial decisions. Overcoming this inertia and moving a customer to consideration are key goals of positioning, framing and design.

Some of the responses Steve received illustrate ways that an ad can break through habitual behaviors:

Be Unconventional: One respondent pointed out that to stand out and become memorable, it must be unconventional, because the conventional is boring, and forgotten because it never engages the consumer:
If you don’t remember the product or service, the ad is a failure. The ad should address a need, demonstrate how the product or service meets the need, and do it in a compelling, memorable way, with a device known as a hook. 25 years after it ran, people still remember Wendy’s “Where’s the beef?” ad.
Use A Hook:  A hook is an interesting way to introduce a new habitual pattern, countering an older perception. It reframes the product so that it is perceived in a new light, and reinforces that new perception through an addictive phrase or idea.

Shock: The element of disruption can be introduced via the depiction of a shocking event. Consider this response:

Commercials that portray people getting hurt are most memorable, i.e. falling off the ladder, walking into the glass door, the football player hitting office workers. Interestingly, I can’t say for certain which products they were pitching.

Be Ironic:  Irony is another way of introducing the unexpected. The element of humor or bad taste can rouse someone from the slumber of the mundane:

Stupid commercials are the most memorable, followed by funny ones. I tend to remember a commercial first then the product.”

Be Heartfelt:  One of the respondents pointed to “a human truth engagingly presented. good example is the commercial for the SPCA, showing pictures of homeless cats and dogs while Sarah McLachlan‘s song “Angel”is played the background. That two-minute advertisement generated a record-breaking $30 million for the American Society for the Prevention of Cruelty to Animals. The commercial became the most successful fund-raising effort for the ASPCA and  created a buzz among animal rescue organizations. It also attracted nearly 200,000 new donors to the organization, and prompted the SPCA to increased its grant program to smaller rescue groups by 900%.

Ally Does It Again

Irony Used to Disrupt Habitual Thinking Patterns: In financial services, I have highlighted Ally’s brilliant commercials, which disrupt ordinary thinking patterns with interesting twists. Now Ally’s “prediction commercial uses irony to attempt to change the way people are accustomed to thinking about Certificates of Deposit.
The ad, created by Grey New York, features an interview with economist and Nobel laureate Thomas Sargent. The prestigious guest is presented with pomp on stage and interviewed as follows:
Interviewer: “Can you tell me what CD rates will be in 2 years.”
Professor Sargent: “No”
Announcer: “If he can’t, no one can. That’s why Ally has a raise your rate CD.”

Since launching the Ally Bank brand in 2009, the Bank has been committed to offering customers industry-leading features and services, and this new ad campaign builds on the momentum. Results: in 2012, Ally Bank customer loyalty has remained strong, with customer accounts having grown 27%t year-over-year to to nearly 1.1 million, with a steadily increasing deposit base.

Steve Olenski is named one of the Top 100 Influencers In Social Media (#41) by Social Technology Review and a Top 50 Social Media Blogger by Kred.

Related Posts:

 Who Are the Mass Affluent?

‘Mass affluent’ investors are those who have liquid investable assets of $100,000 to $1.5 million, and a net worth between $500,000 and $2.5 million.  In the United States there are roughly 33 million mass affluent households, and they own roughly 37% of America’s liquid financial assets. Among family households, approximately thirty percent could be described as being mass affluent.

The mass affluent have been characterized as those who:

  • Save more than they spend and invest for their future.
  • Worry about funding their children’s college education, but are not opposed to their children paying some part of their educational costs.
  • Worry about replacing their paycheck in retirement.
  • Often wish to leave an inheritance to their children.
  • Spend between $4,000 and $10,000 (USD) per month in retirement.

What Are Their Preferred Investment Vehicles?

Investment Vehicles used by mass-affluent

September 2010 study conducted by MetLife surveyed nearly 1,900 consumers over the age of 45 including 500 individuals with at least $200,000 in investable assets.  The study found that this group invests a significant portion of their liquid holdings in bank products:

2005 Wealth Distribution of Mass Affluent Households
Asset Class Percentage
Principal Residence 23%
Investment Real Estate 14%
Liquid Financial Assets 22%
Pension and Employee Retirement Plans 16%
Insurance and Annuities 9%
Privately Held Business 16%

Why They’re Hard to Upsell

Half of those surveyed consider both banks and financial professionals trustworthy, which lines up reasonably well with the results of this Chicago Booth/Kellogg School Financial Trust index chart.

A Bank of America nationwide survey of 1,000 mass affluent consumers finds that many of these customers aren’t keeping their investable assets invested, which could complicate efforts to push more advice and financial planning services to this segment. BofA said:

  • 29% of those surveyed tapped into their long-term savings last year to pay bills or buy groceries.
  • That is consistent with a Fidelity survey that found nearly a third of parents had tapped into their kids’ college funds to pay daily expenses.
  • 41% of BofA respondents report expecting to retire later than they did a year ago.
  • 63% expect it to be harder to save in five years than it is now. took place over three weeks in the fall.

Although about half of those surveyed consider both banks and financial professionals trustworthy, financial products are not an easy sell to them at a time of tightening purse strings.

BofA says its results show that show half of mass affluent customers lack a written financial plan now and almost a third have never had one. Sallie Krawcheck, who runs the global wealth business for BofA, says they are targeting customers who “haven’t shown a fondness for financial planning.”

It sounds like an uphill struggle.

Why You Risk Losing Them To Online Brokerage Firms

A  report from Aite Group examines North American banks’ strategies for deepening relationships with their mass-affluent clients based on Q4 2010 Aite Group interviews with more than 20 executives across 19 of the top 100 North American banks and bank-affiliated broker/dealers.

The study finds that U.S. banks have experienced limited success with deepening their mass-affluent client relationships by cross-selling investment solutions. Overall, their brokerage arms have suffered from weak brand recognition in the investment world and challenging client-acquisition practices through the branch channel.

In addition to these traditional roadblocks, banks must now contend with their clients’ increasing preference for viewing and managing their investments online and are therefore losing assets to online brokerage firms since self-directed investment services provided by banks are not on par with those of online brokerages. By comparison, Canada’s bank brokerages have largely accepted the online channel and, in general, have been more successful in cross-selling investment solutions to their mass-affluent clients than U.S. banks.

“U.S. banks must consider re-evaluating their mass-affluent offer in order to retain assets in the short term and position themselves to grow market share in this segment over the long term,” says Sophie Schmitt, senior analyst with Aite Group and author of this report. “Banks have an opportunity to differentiate themselves in the mass-affluent space–only they can provide clients with a full set of tools for managing short-term cash needs and planning for long-term goals.

Financial Planning Roadblocks

According to Spectrum Group:

  • Only 59% of them have a financial plan.
  • 75% own some type of life insurance, with the largest proportion owning term insurance.
  • Only 21% own a variable annuity produc.
  • Only 24% own a fixed annuity product.

Thus, even for those with insurance products, it is not clear that a formal planning process has been completed or updated.  And as far as including life insurance as part of a broader estate plan, only 16% hold any assets in trust.  Clearly there are opportunities for advisers to assist these households with greater planning opportunities.

So What Do They Want From A Financial Advisor?

A recent survey conducted by HNW, Inc., a marketing and technology firm serving financial services institutions, researched what  financial advisory services mass affluent investors want from their retail banks. The survey, titled “The Elephant in the Branch: Retail Banking and the Mass Affluent Opportunity” is based on responses from over 400 individuals from this segment taken in August, 2012.  Life Health Pro  believes the results have marketing lessons that can also be useful to independent advisors trying to target this growing segment.

According to HNW this segment is an important one because:

  • It is the fastest growing wealth segment in the country.
  • It currently accounts for one-third of all retail investment assets.

Study: Their Attitudes and Behaviors

Here are some of the attitudes and behaviors that the HNW study reveals:

They Don’t Consider Themselves Wealthy: Stacey Haefele, president and CEO of HNW, said the mass affluent “don’t want to be identified with that group.” This isn’t unrealistic, as the definition for rich and high net worth is steadily moving up. Most instead consider themselves “savers.”

  • 45% say they are “conservative investors.”

They Want More For Their Money: A majority said that the more they place in the bank, the more service they feel they should receive. Haefele concludes that to entice them to invest more money with them financial institutions need to provide differentiated service commensurate with their bank balances in a profitable manner.

  • Just waiving banking fees is probably not enough.

They Dislike a Product Push: Like most clients, the mass affluent don’t want an advisor who is only interested in selling them products:

  • Nearly half said that bank-based financial advisors only contact them “to sell or push something.”

Trust is a major factor when choosing a financial advisor.

  • 3 in 10 respondents “don’t trust using the investor advisor at my primary bank.”
  • 38% characterized the relationship with their primary banks as an acquaintance, or “somebody I might acknowledge but not spend any real time with.”

Thoughts on Engaging Them in Financial Planning

How can you effectively assist the mass affluent with their wealth and estate planning needs? Here are some factors to keep in mind:

  • Many put little faith in a financial plan because it is presented simply in a manner that leads to insurance sales.  It is critical for an advisor to establish a holistic relationship that factors in other investment and financial needs to gain their confidence and acceptance of the plan.
  • One of the biggest fears of the mass affluent is outliving their assets.  Any planning should include discussion of these concerns and how to protect against them.
  • Make sure that your discussions are not just a product push.  This is a major turn off for investors.
  • These individuals are well educated and increasingly comfortable using the internet to gain information.  An advisor must be just as knowledgeable about the markets and various options as they are.  Be ready to answer their questions regarding multiple subjects.  Although no one can be the expert on every topic, have access to various experts in the estate planning and investment fields.  Be ready to refer them to a local attorney or even an investment manager (if that is not your own expertise.)  Be sure to work together effectively with these experts in the future on behalf of the client.
  • Proactively reach out to them with information, not just product sales.  Sending a client a copy of an article that he or she might find interesting shows that you have an ongoing interest in them.
  • Make sure you provide them a strong understanding of the various tax implications and related benefits of any products that you present to them, since taxes are becoming a larger concern for these households.

The most effective advisors will be able to position themselves as an advocate for these 30 million mass affluent investors and not just a “sales guy.” They must be pushed to take action, but the approach must be one in which trust is carefully cultivated, and real value provided. They’re high maintenance and require dedicated cultivation. There is an enormous opportunity to assist these investors with a thoughtful well-informed approach.

See also:

AT&T, T-Mobile, Verizon Wireless Introduce “Isis” and Bloomberg News report that that a new mobile wallet payment system is rolling out as a joint venture between the nation’s three largest mobile phone service providers.  Isis, the mobile wallet service from AT&T, T-Mobile, and Verizon Wireless, will pilot in Austin, Texas, and Salt Lake City, Utah in September, 2012.  The NFC-based (Near Field Communications) mobile payment system was created by Verizon, T-mobile and AT&T to try and make mobile payments a common practice.

  • Near field communication (NFC) is a set of standards for smartphones and similar devices to establish radio communication with each other by touching them together or bringing them into close proximity, usually no more than a few centimeters for applications including contactless transactions and data exchange.

The Isis mobile wallet app that will be available to more than 100 million United States Credit Card holders and compete with Google Wallet and Opera, offering a secure and convenient way to use a mobile phone to pay with a credit card.

Chase, Capitol One, and Barclay were the first to sign up for the service. Isis added a batch of new financial partners earlier this year, including American Express’ various credit card offerings  (including the company’s own mobile-linked Serve cards), which will let users of those cards load them into the Isis app and make payments with their NFC-equipped smartphone. While American Express had already signed on as an Isis partner last year, this is the first time that the company has committed to tying its cards to the platform.

A simple UI lists your current payment options. At the bottom is “Isis Feed” which is likely a payment history page, “Directory” which is a list of shopping outlets that will accept the Isis payment system, and “More” (settings).

The pilot was delayed since late last year because Isis decided to use a different method for processing payments than originally planned. The original plan involved having the phone companies behind Isis process all the payments made with the program, but instead, credit card payment processors will process the payments to increase the security of transactions for both consumers and businesses.

Bloomberg reports that another possible reason for the delay is that there are currently still very few smartphones on the market capable of handling such a transaction. T-Mobile has just four smartphones equipped with the near-field communications that Isis runs on that are compatible with its network. Verizon came under fire late last year when it was discovered that Google Wallet was not supported on their version of the Galaxy Nexus phone.

Many believe that Isis has a far better chance of catching on with consumers than some of the other mobile wallet programs available now, such as Google Wallet, or in development because of the perceived value for consumers whose phone companies’ products and services they already use every day, which will make for a seamless mobile wallet entry.

Click on the image to see videos of Google Wallet in action

Mobile wallet adoption could become the norm within the next few years, as many consumers become convinced of its safety and convenience. For more information on ISIS, see their website at

Related Article:

Google Wallet Leads the Way

According to Berg Insight, the total number of users of mobile banking worldwide doubled to 55 million between 2008 and 2009, and again doubled in 2010.

The major banks (Citibank, Wells Fargo, Bank of America, etc.) already have a substantive mobile presence, with even community banks on their heels. But breakthroughs aren’t found in repetition, but in meaningful innovation that’s value-added.

Mobile Disconnect

May 2011 study from Foresee shows mobile banking is lagging far behind other channels in customer satisfaction, with only 2% of retail banking consumers preferring it to online and branch banking. Why the disconnect? Rowland of Introduce The New believes that it’s because the mobile banking features offered aren’t new functions, but what customers already expect from their bank and can already get online. However, the few institutions that go beyond this cost of entry position by designing bold user experiences in ways that reaches beyond what’s already available online or at bank branches have an opportunity to succeed at attracting customers. Banks aren’t just competing with each other on the mobile app market, but with every other app that’s available.  “Non-bank thinking”  is needed to allow customers to use the mobile platform in striking, new ways.

He sites these examples of extraordinary mobile banking apps:

1. Bump-to-Pay / Wave-to-Pay

In March, PayPal unveiled its Bump to Pay mobile app feature which allows users to transfer funds between each other by entering a dollar amount into the app and then “bumping” their phones together, which  makes transferring between customers fun, interesting and distinctively mobile.

Companies like Google and Payfone are rolling out Near Field Communications technology will allow consumers to make point-of-sale purchases by waving their phones over a sensor instead of swiping their credit cards.

2. Click-to-Deposit

USAA released the first mobile app to offer remote deposit in 2009 —  the ability to deposit checks by snapping pictures of them using a smartphone camera, receiving high tribute in the New York Times. Only Chase presently offers remote deposit, released almost a year later. A research study conducted by financial services strategy firm Mercatus showed 43% of mobile banking customers cited remote deposit as the mobile banking feature that would most likely encourage them to switch primary banks.

Thinking Outside the Bank: 5 Factors in Increasing Mobile Adoptation

John Moon, manager of mobile adoption marketing at Fiserv, writes in American Banker about 5 factors that will bring all financial institutions to recognize the benefits the mobile channel offers. Those benefits:

  • Lower cost to serve.
  • Increased customer satisfaction.
  • Retention.
  • Higher return on investment.

However, he notes that many financial institutions attract early adopters within a year of offering the service, but progress then stagnates to include just a small additional percentage of adopters over the next two years. He states that financial service providers need to leverage key drivers of consumer adoption to establish mobile financial services as the norm. There are five factors of consumer acceptance are these: Consumers must decide if mobile financial services are 1) useful, 2) accessible, 3) secure, 4) familiar and 5) easy to use. Here is a more detailed discussion of these five factors of adoption.

1. Make the Case That Mobile Is Useful.

Knowing what customers find useful can enable financial service providers to develop marketing messaging that will resonate with potential adopters. To accelerate broad adoption, providers need to offer compelling answers to the question, “Why do I need to transact through the mobile channel?”

2. Provide Access to Mobile Through All Devices.

Simply put, the more accessible a product, service or technology is, the greater the opportunity to use it. To break through the glass ceiling and attract additional users and transactional activity, the mobile channel must be made more attractive and accessible. Providers should ensure mobile accessibility for as many customers as possible and support multiple platforms and devices, including tablets, to tap into a broader customer base.

3. Help consumers overcome security concerns.

The perception that mobile transactions are less secure than a desktop computer, laptop or card-based transactions is a big factor to overcome in turning skeptics into users. To convert a greater share of the mass market, perceptions about mobile security must be properly addressed.

4. Familiarity creates a natural transition across channels.

Consistency in branding and experience across channels allow for an easier and more comfortable transition from one channel to another. Facebook, for example, does an excellent job of providing consistency. Consumers enjoy a consistent experience when they access their Facebook accounts, no matter what channel, platform or device they use. If a mobile offering is consistent with what is presented in other channels, consumers will recognize and feel comfortable with the service.

5. Mobile services must be easy to use.

Technology is intended to make life easier, but if it’s not easy to use, only early adopters or tech-savvy consumers will continue to use the technology. In a market where new technologies and feature sets are rapidly developed and promoted as differentiators, providers need to understand the importance of balancing the sophistication of the technology with simplicity for the consumer.

To ensure mobile services are easy to use, providers should deliver an intuitive user experience that eliminates the need for training prior to conducting simple activities. Communication with customers via posts and collateral about the benefits and ease of mobile use will also be effective.

To extend the benefits of the mobile channel to the broadest possible range of customers, banks must think outside the bank.


Related American Banker Content

Worldwide Survey Provides Valuable Customer Insights

An Ernst & Young study of retail banking customers around the world examines the views of more than 28,500 banking customers in 35 countries, gathered in March 2012. The 62-page survey which can be  downloaded here  provides insights into bank customer behaviors, including:

  • How many consumers have switched?
  • How many customers plan to switch and why?
  • Why are US customers they switching?
  • How many banks do they use?
  • What kind of banks do they use for different purposes?
  • Are they really satisfied and trusting of their banks?

How Many Have Switched Banking Providers?

  • 34% of customers worldwide have changed their main banking provider
  • 74% have done so in the last 10 years (marginally lower than in 2011.)
  • In the US and Canada, the number increased from 38% in 2011 to 45% in 2012.

How Many Plan to Switch and Why?

Customers planning to change banks worldwide since 2011:

  • increased from 7% to 12%.
  • 50% cite high fees and charges as the primary reason.
  • high fees or rates on deposits is the primary reason most switch primary banks.
  • Poor rates on accounts is an important factor for U.S., Canadian and European customers.

Top 10 Reasons U.S. Consumers Are Switching

Customers want more than a better deal and moreover, want the flexibility to shape the relationship, contacting their bank whenever and however they choose. They may prefer online channels for simple transactions, but demand high-quality, personalized services for more complex transactions.

  1. High fees.
  2. Poor account rates.
  3. Poor branch experience.
  4. Proximity of branches.
  5. Service failings.
  6. Lack of personalized contact.
  7. Poor call center experience and range of products.
  8. Poor internet/mobile experience.
  9. Poor brand image
  10. Poor adviser competency

How Many Banks Do Consumers Use?

Banking consumers are diversifying their relationships since 2011— spreading their money around.

  • Customers using only one bank dropped from 41% to 31%.
  • Those with three or more have increased from 21% to 32%.

Which Institutions Consumers Use For Specific Products

Customers tend to:

  • use their main bank primarily for checking, savings, credit cards,
  • diversify more for investments, retirement, insurance, mortgage, personal loans and car loans.

Are They Really Satisfied and Trusting?

Satisfaction High, Trust Low: Ernst & Young found that overall satisfaction remains high. However, trust levels remain low.

  • Consumer confidence dropped 40% globally.
  • In Europe’s more beleaguered countries it’s nearly double:
    • a 72% drop in Italy and 76% in Spain.
  • In the U.S., 50% say confidence in the banking sector has decreased over last year.
    • 9% say they are more confident.
    • 40% say there’s been no change in their feelings.

Bottom Line: What Should Banks Do?

Banks need to focus on providing a better customer experience to reduce churn and attrition rates. Ernst & Young researchers say that in order to retain their customers, banks must adapt their business models to cater to increased demands and also accommodate a wide range of customized services and products.

In contrast, the 3 models most commonly pursued by banks are based primarily on:

  • low-cost competition, or
  • high-touch service and/or
  • accessibility.

The Ernst & Young report offers this advice:

  • Make low-cost digital channels customers’ preferred choice. Banks should encourage customers to use digital channels whenever possible by using price incentives.
  • Make pricing and service promises transparent. Pricing is critical to customer satisfaction, but most customers have no idea how much they pay each year. Transparency over pricing and service promises is vital if banks are to deliver something customers value.
  • Offer tiered levels of customer experience. Customers should have the option to buy into certain products and services, and the ability to earn upgrades through loyalty, whether in terms of longevity or the share of wallet handled by a particular bank.
  • Encourage customer self service. Banks needs to improve the way they provide information and advice to interest and convince self-directed customers, including financial planning tools, ranges of product and pricing bundles.

Large, full-service banks need to defend market share against new entrants which offer greater specialization, while retaining the ability to meet a wide range of needs and sustain profitability.

Leading the Pack: Google’s early entry into the mobile wallet field has allowed it to focus more on expanding the system’s capabilities.

Google Wallet, available for use on six smartphones and a tablet, and accepted at over 200,000 locations nationwide, is expanding its capabilities with a new innovation that allows it to be used in conjunction with any credit or debit card issued by payment processors Visa, MasterCard, American Express and Discover.

User Friendly:  To add a new card to the Google Wallet, a user needs only enter the card number in the Google app. Then the card can be used to make any type of purchase, which is added to the transaction record listed on the phone, alongside merchant name and dollar amount.

Secure: If the mobile device is lost or stolen, users can remotely disable the app from their online Google Wallet account. The account can also be locked, requiring a PIN code to reactivate. Robin Dua, Google Wallet’s head of product management, wrote on Google Commerce’s official blog:

If you lose your phone, just visit the ‘Devices’ section in the online wallet and select the phone with the mobile wallet you wish to disable. When you successfully disable your wallet on a device, Google Wallet will not authorize any transactions attempted with that device. If the Google Wallet online service can establish a connection to your device, it will remotely reset your mobile wallet, clearing it of card and transaction data.

Once using an internet connection to change the card they’re currently using, or enter a new one, users can make purchases offline using the card they currently have selected.

Near-field communications-enabled mobile payment systems are expected to receive much more competition in the near future.


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